Entrepreneurial Learning and the Existence of Credit Markets

Research output: Contribution to journalArticle

9 Citations (Scopus)

Abstract

I explore the economic implications of learning by doing by borrower entrepreneurs who are initially imperfectly informed about their innate abilities. It is shown how entrepreneurial learning worsens the adverse effects of moral hazard, causing the possible disappearance of otherwise viable credit markets and thereby decreasing social welfare. The reason is that learning reduces subjective uncertainty about risky future outcomes, thus encouraging excessive risk-taking behaviour.
Original languageEnglish
Pages (from-to)37-46
Number of pages10
JournalJournal of Economic Behavior and Organization
Volume62
Issue number1
Early online date27 Oct 2005
DOIs
Publication statusPublished - Jan 2007

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Risk-taking behavior
Social welfare
Economics
Moral hazard
Uncertainty
Learning-by-doing
Credit markets
Entrepreneurs
Entrepreneurial learning

Keywords

  • credit markets
  • learning by doing

Cite this

Entrepreneurial Learning and the Existence of Credit Markets. / Parker, Simon.

In: Journal of Economic Behavior and Organization, Vol. 62, No. 1, 01.2007, p. 37-46.

Research output: Contribution to journalArticle

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